PRIMA™ ( Protected Retirement Income Management Assistant), is an online app from InjAnnuity Inc., for evaluating, actively managing and monitoring a 401k portfolio of Investments and Variable, Indexed & Fixed Deferred annuities. As such it is an indispensable tool for when the markets get jittery during times of National concern, such as the Covid-19 Pandemic. Use it's projected lifetime income illustrations to address any anxiety your client's might have, so that they don't make bad and costly decisions in their 401k plan.
In-Plan Deferred Annuities
Deferred Annuities can be quite complicated and opaque. Significantly, till now, Financial Advisors have had no effective tool to estimate a contract’s future performance or manage and monitor it for evaluation and decision-making on an on-going basis.
However, if you are not a Financial Advisor or do not have some in-depth prior experience with Deferred Annuities, then we strongly advise you to thoroughly check out the information that we have posted here before you proceed any further with this website.
For the first time ever, this app provides Financial Advisors with a standardized method and metric for evaluating investments and annuities that are projected individually and as a unit, so they can better advise their clients. However, policyholders, who don't mind investing some time, can also use the software to do same.
How was this accomplished?
Overview
Variable Deferred Annuities (VDA)
Variable Deferred Annuities are different from other DA products, in that, the policyholder assumes the risk for their Variable (generally Mutual Funds) investments in the contract. To offset this risk, many products offer a guardrail in the form of riders for various Guaranteed Income Benefits (GIBs), in the event that the market goes south, and their underlying sub-account assets follow suit.
These GIB riders can fall into several categories with various titles such as: Guaranteed Minimum Income Benefits (GMIBs), Guaranteed Minimum Accumulation Benefits (GMABs), Guaranteed Minimum Withdrawal Benefits (GMWBs), Guaranteed Lifetime Withdrawal Benefits (GLWBs), to name the most popular ones.
They represent the Insurance aspect of the contract and are all designed to provide a minimum income guarantee to the policyholder to hedge against downturns in the Market.
GIB benefits are either a future payout annuity or stream of withdrawals; often, with Guaranteed Withdrawal Benefit Riders (GWBs), the Accumulation Fund will persist until it is depleted by these withdrawals. However, in many cases, after the Accumulation Fund depletes the payments will continue until death of the annuitant or joint annuitants (GLWB – Guaranteed Lifetime Withdrawal Benefit).
For the main Accumulation Fund, Fees and Charges are deducted and Interest is credited, based on the performance of the underlying sub-accounts.
Therefore, projecting a Variable contract entails a lot of uncertainty, meaning that the app needs to estimate future projections of the Accumulation Fund, any parallel Shadow Funds and any related Benefits, such as future Cash Surrender Values, Income Streams and Death Benefits that depend on them.
Investments
Handled the same way as Variable Annuities minus the Insurance component.
Fixed Indexed Deferred Annuities (IDA)
With Indexed Annuities, the Policyholder is indirectly invested in the market and is not at risk like they would be with Variable Annuities. However, like, Variable, the performance of their Indexed Funds is dependent the the markets' performances.
Fixed Deferred Annuities (FDA)
In general, Fixed Deferred Annuities are dependent on the performance and efficiency of the Insurance company. However, their investments are very conservative, so DARMA™ projects their returns based on the performance of a passel of typical Insurance company investments.
All Deferred Annuities
No matter which kind of annuity you wish to evaluate, its projected cash flows are discounted based on the policyholder' risk-appetite and that in turn will vary from one economic scenario to the next.
Goals
Solution
New sound metrics to measure the plan’s performance.
This metric is ITM© (“In-The-Moneyness”) and it has 2 facets. A plan is ITM when it's outperforming inflation
Basically it’s a + or – percentage produced by the app where ‘+’ is ITM and ‘-' is not ITM and its size indicates the magnitude of the ITM.
IMPORTANT PRINCIPLE
ITM is solely based on future estimate CASH payments to the participant!
The App establishes a theoretical Participant Bank Account to process all projected future cash events:
The theoretical Participant Bank processes the following Cash Events:
If the event is not a cash event resulting from the above and going thru the theoretical Participant Bank, then it it does not contribute to the ITM!
Discounting Future Cash Benefits
ITM is calculated using the time value of money to determine the present value of future cash financial events. This time value of money uses a discount rate that is based on projected inflation.
PRIMA™ provides ITM using projected Stochastic (Randomly generated) Economic Scenarios
Each Scenario has its own ITM
The App employs a generally accepted approach for generating thousands of future Calibrated Randomly Generated Economic Scenarios, that produce a Frequency Distributions of the continuous random variables for both ITM and AIM.
Project up to 10,001 calibrated random scenarios for each variable asset category and provide the user with the results of a range, representing the lowest performing percentile to the highest (0 thru 100).
The resulting Median Scenario (50th Percentile) is recommended as the app’s standard yardstick for the contract’s performance. The metric can be used both as an indicator of the contract’s value and for comparison with other competing contracts' ITM that were also processed using this app.
Each Scenario also Produces all future year-end Cash Surrender Values, Death Benefits, Elective Withdrawals and Income streams in the Users targeted range of years
Using an existing available Standardized Classification for the Sub-Accounts Funds Each Sub-Account would have its own level of risk, based on the type of underlying assets.
The App uses the same classification that Insurance Companies use for their new statutory PBR Valuation requirements.
The app presents an initial questionnaire which allows you to model the contract's main features and Benefits followed by a focused hierarchical outline based on those initial answers.
In the App, Current Economic conditions are updated frequently, by InjAnnuity, and future Economic Scenarios are re-generated using these current market condition as a seed for utilization by the User.
Things Change! - User Diligence
PRIMA™ produces many sophisticated analytical reports and audits and provides electable options based on the contract’s rules, to strategize the User’s objectives and optimize the contract’s ITM. The strength of the app lies in the simplicity of standardizing the results as an ITM percentage. This is especially useful if you who wish to compare different products for potential purchase.
To summarize; this is an on-going process and the plan should be periodically monitored in light of many factors, such as economic conditions, changes in a participant's health and longevity, changes to an annuity contract initiated by the company, short-term guarantees, change of a participant’s risk appetite, death of spouse, to name a few.
All of these can materially affect the ITM evaluation and, if necessary, may require action by the participant to re-optimize it.
BE PREPARED TO INVEST SOME TIME IN THIS APP
This will be a challenging but valuable investment of your time.
Effort and patience will be required, but the reward will be a clearer understanding of how a 401k plan behaves, and what *you* can *do* with it to maximize returns.
Bad or no decision-making about a plan can result in the loss of significant income, so using this app properly is extremely important for future retirement income.
Bear this in mind as you enter the information, because, unless you have a very simple plan you will probably have to spend some time and effort to track down all the data that you will need to enter.
BE PREPARED TO INVEST SEVERAL DAYS OF RESEARCH, ENTERING AND REVISING DATA, CHECKING REPORTS AND AUDITS FROM THIS APP
ALL NECESSARY FOR THE EXTREMELY IMPORTANT GOAL OF UNDERSTANDING AND MONETIZING A PLAN
DON'T DELAY. GET STARTED TODAY!
In-Plan Deferred Annuities
Deferred Annuities can be quite complicated and opaque. Significantly, till now, Financial Advisors have had no effective tool to estimate a contract’s future performance or manage and monitor it for evaluation and decision-making on an on-going basis.
However, if you are not a Financial Advisor or do not have some in-depth prior experience with Deferred Annuities, then we strongly advise you to thoroughly check out the information that we have posted here before you proceed any further with this website.
For the first time ever, this app provides Financial Advisors with a standardized method and metric for evaluating investments and annuities that are projected individually and as a unit, so they can better advise their clients. However, policyholders, who don't mind investing some time, can also use the software to do same.
How was this accomplished?
Overview
Variable Deferred Annuities (VDA)
Variable Deferred Annuities are different from other DA products, in that, the policyholder assumes the risk for their Variable (generally Mutual Funds) investments in the contract. To offset this risk, many products offer a guardrail in the form of riders for various Guaranteed Income Benefits (GIBs), in the event that the market goes south, and their underlying sub-account assets follow suit.
These GIB riders can fall into several categories with various titles such as: Guaranteed Minimum Income Benefits (GMIBs), Guaranteed Minimum Accumulation Benefits (GMABs), Guaranteed Minimum Withdrawal Benefits (GMWBs), Guaranteed Lifetime Withdrawal Benefits (GLWBs), to name the most popular ones.
They represent the Insurance aspect of the contract and are all designed to provide a minimum income guarantee to the policyholder to hedge against downturns in the Market.
GIB benefits are either a future payout annuity or stream of withdrawals; often, with Guaranteed Withdrawal Benefit Riders (GWBs), the Accumulation Fund will persist until it is depleted by these withdrawals. However, in many cases, after the Accumulation Fund depletes the payments will continue until death of the annuitant or joint annuitants (GLWB – Guaranteed Lifetime Withdrawal Benefit).
For the main Accumulation Fund, Fees and Charges are deducted and Interest is credited, based on the performance of the underlying sub-accounts.
Therefore, projecting a Variable contract entails a lot of uncertainty, meaning that the app needs to estimate future projections of the Accumulation Fund, any parallel Shadow Funds and any related Benefits, such as future Cash Surrender Values, Income Streams and Death Benefits that depend on them.
Investments
Handled the same way as Variable Annuities minus the Insurance component.
Fixed Indexed Deferred Annuities (IDA)
With Indexed Annuities, the Policyholder is indirectly invested in the market and is not at risk like they would be with Variable Annuities. However, like, Variable, the performance of their Indexed Funds is dependent the the markets' performances.
Fixed Deferred Annuities (FDA)
In general, Fixed Deferred Annuities are dependent on the performance and efficiency of the Insurance company. However, their investments are very conservative, so DARMA™ projects their returns based on the performance of a passel of typical Insurance company investments.
All Deferred Annuities
No matter which kind of annuity you wish to evaluate, its projected cash flows are discounted based on the policyholder' risk-appetite and that in turn will vary from one economic scenario to the next.
Goals
- Determine a sound Scientific Method and Metric for evaluating a contract and projecting retirement income
- Provide on-going Management and Monitoring tools
Solution
New sound metrics to measure the plan’s performance.
This metric is ITM© (“In-The-Moneyness”) and it has 2 facets. A plan is ITM when it's outperforming inflation
Basically it’s a + or – percentage produced by the app where ‘+’ is ITM and ‘-' is not ITM and its size indicates the magnitude of the ITM.
IMPORTANT PRINCIPLE
ITM is solely based on future estimate CASH payments to the participant!
The App establishes a theoretical Participant Bank Account to process all projected future cash events:
The theoretical Participant Bank processes the following Cash Events:
- Contributions (including adjustments for inflation)
- Pre-Retirement Withdrawals
- Surrenders
- Annuity Payments
- Guaranteed Withdrawals
- Death Benefits
- Taxes
- Tax Penalties
- Tax Rebates
If the event is not a cash event resulting from the above and going thru the theoretical Participant Bank, then it it does not contribute to the ITM!
Discounting Future Cash Benefits
ITM is calculated using the time value of money to determine the present value of future cash financial events. This time value of money uses a discount rate that is based on projected inflation.
PRIMA™ provides ITM using projected Stochastic (Randomly generated) Economic Scenarios
Each Scenario has its own ITM
The App employs a generally accepted approach for generating thousands of future Calibrated Randomly Generated Economic Scenarios, that produce a Frequency Distributions of the continuous random variables for both ITM and AIM.
Project up to 10,001 calibrated random scenarios for each variable asset category and provide the user with the results of a range, representing the lowest performing percentile to the highest (0 thru 100).
The resulting Median Scenario (50th Percentile) is recommended as the app’s standard yardstick for the contract’s performance. The metric can be used both as an indicator of the contract’s value and for comparison with other competing contracts' ITM that were also processed using this app.
Each Scenario also Produces all future year-end Cash Surrender Values, Death Benefits, Elective Withdrawals and Income streams in the Users targeted range of years
Using an existing available Standardized Classification for the Sub-Accounts Funds Each Sub-Account would have its own level of risk, based on the type of underlying assets.
The App uses the same classification that Insurance Companies use for their new statutory PBR Valuation requirements.
The app presents an initial questionnaire which allows you to model the contract's main features and Benefits followed by a focused hierarchical outline based on those initial answers.
In the App, Current Economic conditions are updated frequently, by InjAnnuity, and future Economic Scenarios are re-generated using these current market condition as a seed for utilization by the User.
Things Change! - User Diligence
PRIMA™ produces many sophisticated analytical reports and audits and provides electable options based on the contract’s rules, to strategize the User’s objectives and optimize the contract’s ITM. The strength of the app lies in the simplicity of standardizing the results as an ITM percentage. This is especially useful if you who wish to compare different products for potential purchase.
To summarize; this is an on-going process and the plan should be periodically monitored in light of many factors, such as economic conditions, changes in a participant's health and longevity, changes to an annuity contract initiated by the company, short-term guarantees, change of a participant’s risk appetite, death of spouse, to name a few.
All of these can materially affect the ITM evaluation and, if necessary, may require action by the participant to re-optimize it.
BE PREPARED TO INVEST SOME TIME IN THIS APP
This will be a challenging but valuable investment of your time.
Effort and patience will be required, but the reward will be a clearer understanding of how a 401k plan behaves, and what *you* can *do* with it to maximize returns.
Bad or no decision-making about a plan can result in the loss of significant income, so using this app properly is extremely important for future retirement income.
Bear this in mind as you enter the information, because, unless you have a very simple plan you will probably have to spend some time and effort to track down all the data that you will need to enter.
BE PREPARED TO INVEST SEVERAL DAYS OF RESEARCH, ENTERING AND REVISING DATA, CHECKING REPORTS AND AUDITS FROM THIS APP
ALL NECESSARY FOR THE EXTREMELY IMPORTANT GOAL OF UNDERSTANDING AND MONETIZING A PLAN
DON'T DELAY. GET STARTED TODAY!